Banning of WeChat Gives Rise to Worries as Investors and Consumers Seek Clarity
On Wednesday, after the U.S. banned WeChat whose parent is China-based Tencent Holdings, the company has come under pressure to address concerns related to transactions and outline its plans to mitigate any fallout.
The ban will take effect in September. The latest salvo in a worsening U.S.-China trade war and has cast a shadow over Tencent, aiming to eventually get about half its gaming revenue from overseas versus its last year to gain about 23%. The U.S. is the key to this plan as it is the second-largest gaming market after China.
On Friday after news of the ban, shares of Tencent Holdings plunged by more than 10% report a loss of more than $74 billion off its market value.
Dan Wang, the analyst with Gavekal Dragonomics, said “The order as written is so broad that it could end up blocking the ability of any U.S. person or company from working with Tencent.”
Financial markets and millions of consumers are seeking more clarity on the subject.
Tencent April-June results will be projecting more light on the subject. The company was expected to post a 14% higher profit and a 27% jump in revenue to $16.22 billion (112.76 billion yuan), according to Refinitiv data due to strong demand from users as most of them are stuck at home.
Its U.S.-listed subsidiary, Tencent Music has reported more than expected quarterly results. In response to a question, if they had a plan to react to a recommendation from the Trump administration on auditing U.S.-listed Chinese firms, the company said it was premature to speculate over a potential delisting.